When is extrinsic (reward-dependent) motivation bad for employee creativity?

Organization leaders should create conditions that make extrinsic motivation relevant and important to individuals

Photo: Priyanka Parashar/Mint
Photo: Priyanka Parashar/Mint

Rapidly changing technologies, an uncertain business environment, and increased competition in the market, are forcing organizations to explore the factors that impact their employees’ creativity—a quality needed for development of new technologies, products, processes, and services that raise performance and lower costs. One such factor is employee work motivation, the force that determines the direction, intensity, and duration of work-related behaviour.

Work motivation is of two types, intrinsic and extrinsic. Intrinsic motivation refers to doing a job when one finds it to be inherently interesting and enjoyable. Extrinsic motivation refers to the performance of an activity to attain some external, separable outcome. Intrinsic motivation is considered to be essential for promoting creativity at the workplace. However, the impact of extrinsic (reward-dependent) motivation on employee creativity has been a topic of much debate. Several scholars and practitioners argue that the use of extrinsic rewards has a negative, crowding-out effect on intrinsic motivation, particularly in relation to interesting tasks. Thus, performance in interesting tasks is likely to suffer upon the introduction of performance-related pay. On the other hand, others argue that humans react to external incentives in a predictable manner and individuals perform best when the incentive system links rewards to performance.

Extrinsic motivation can be classified into external regulation-based extrinsic motivation, which means doing an activity only to obtain a reward, and integrated extrinsic motivation, which refers to identifying with the value of an activity to the point that it becomes part of the individual’s sense of self. For example, an employee who does her work because she personally grasps its value for her chosen career is extrinsically motivated, as is one who does her work because of her supervisor’s control and fear of punishment. Both involve external instrumentalities rather than an inherent liking for the work itself; yet, the former case of extrinsic motivation entails personal endorsement (internalization) and a feeling of choice, whereas the latter involves compliance with an external regulation.

Is extrinsic motivation helpful or detrimental for performance? To answer this question, I surveyed 493 scientists working in 11 R&D labs of India’s largest civilian research organization operating in the domains of biological sciences, chemical sciences, physical sciences, earth sciences and engineering (forthcoming in Personnel Review). The relationship between intrinsic motivation, integrated extrinsic motivation and pure extrinsic motivation (external regulation based motivation) with creative work behaviour and creative performance (measured in terms of papers published in peer-reviewed journals, patents awarded, the average impact factor of the journals in which papers were published, and conference papers written) was studied. The study showed that intrinsic motivation and integrated extrinsic motivation were both positively related to employee creative work behaviours as well as creative performance. However, extrinsic (reward-dependent) motivation was negatively related to creative work behaviours and to creative performance.

The study showed that integrated extrinsic motivation can promote creativity at workplace. An employee who develops integrated extrinsic motivation is motivated by the value of the work and its contribution to career growth. Once extrinsic motivation is integrated into an employee’s sense of being, it helps sustain effort over time, and the employee becomes more engaged at work and more focused. Such an employee may also be motivated by regulation-based extrinsic value money earned by the work, but is largely motivated by the value of the work she is doing. Integrated extrinsic motivation is also different from intrinsic motivation, because the employee is not doing the work because she is purely interested in the work, rather because she feels that the work provides her a sense of identity, self-fulfilment, and career enhancement. When people develop integrated extrinsic motivation, they experience volition, or self-endorsement of their actions. They are more likely to be high on creativity than those who are just motivated by regulation-based extrinsic rewards.

Ignorance of the subtle differences between the two forms of extrinsic motivation might be a possible reason for the inconsistent and inconclusive relationships between extrinsic motivation and creativity found in research as well as in practitioner views. Rather than merely focusing on the question of whether extrinsic motivation is positively or negatively related to creativity, organization leaders should create conditions that make extrinsic motivation relevant and important to individuals. The degree to which people are able to actively synthesize cultural demands, workplace values, and external regulations, and incorporate them into the self is in large part a function of the degree to which their basic psychological needs are satisfied. If organizations are interested in impacting the creative performance of their employees through extrinsic rewards, they should ensure that the rewards are accompanied by an understanding of the value of the rewards not just in monetary terms but also in terms of their value for the individuals’ growth and development. It is essential that the rewards are accompanied by feelings of self-efficacy, competence, and autonomy.

Vishal Gupta is an associate professor and teaches organizational behaviour at the Indian Institute of Management Ahmedabad.

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